Modeling Your Appraisal Report to Meet Your Client's Needs in the Commercial Marketplace

2. Modeling Your Appraisal Report to Meet Your Client's Needs in the Commercial Marketplace • Misa Zane, MAI CW Financial Services Austin, Texas August, 5, 2014 • Nick Tillema, MAI, SRA , AI-GRS Access Valuation, LLC

3. Modeling Your Appraisal Report……. “Appraisal reports, due to their indication of market value, are often used by clients to recycle the report’s information. The panel will discuss the key areas in which clients focus their attention while providing insight as to how information on the subject property, marketplace and the analysis are utilized to streamline the client’s internal processes. The goal for this session is for appraisers to recognize the importance of an appraisal report in the capital marketplace.”

4. “If your only tool is a hammer, everything starts to look like a nail” Modeling Your Appraisal Report…..

5. Modeling Your Appraisal Report….. What is expected? An un-biased, independent, and objective estimate of value (that is expected by your client, to further your client’s cause).

6. Your house as seen by you……

7. Your house as seen by your buyer……

8. Your house as seen by your mortgage lender…

9. Your house as seen by your appraiser……

10. Your house as seen by your tax assessor……

11. Modeling Your Appraisal Report….. • Who Expects What? • Lenders • Tax Appeal Clients • Eminent Domain Parties • Litigation • Non-Cash Charitable Donations • Government Entities • Private Citizens

12. Modeling Your Appraisal Report….. Lenders • Value • USPAP • Secondary Market • Government Regulations • Market Information • All Three Approaches • Sales Adjustment Grid • Combination

13. Modeling Your Appraisal Report….. Property Tax Appeal • County Assessor versus Property Owner • Government Regulations • Value Standard • Mass Appraisal Techniques versus the Three Approaches • Market Information • USPAP

14. Modeling Your Appraisal Report….. Eminent Domain • State (Government Entity) versus Property Owner • Government Regulations • Value Standard • Partial versus Full Taking • Recognition of Severance versus Consequential Damages • Value not affected by current works project • USPAP

15. Modeling Your Appraisal Report….. Litigation • State (Government Entity) versus Property Owner • Government Regulations • Value Standard • Partial versus Full Taking • Recognition of Severance versus Consequential Damages • Value not affected by current works project • USPAP

16. Modeling Your Appraisal Report….. Internal Revenue Service Government Entity Uniform Appraisal Standards for Federal land Acquisition (Yellow Book) Specific requirements Format Definitions Before / After Full vs. Partial Acquisitions Review Standard of Value • IRS versus private citizen? • Non-Cash Charitable Contribution • Specific requirements • Qualified Appraiser • Qualified Appraisal • Daubert • USPAP

17. Modeling Your Appraisal Report….. Private Citizens • Purpose? • Format? • Three Approaches? • USPAP?

18. Modeling Your Appraisal Report….. Why is there a difference? • Because everyone has different interests. • Because everyone has somebody looking over their shoulder • Because everyone is looking out for their own best interest. • Because everyone has a different perspective of what an appraiser does.

19. Modeling Your Appraisal Report….. What happens if you miss the mark?

20. Modeling Your Appraisal Report….. What happens if you miss the mark? • Turning the appraisal in two days before a trial with a value the favors the opposing side. • Realizing, after you submit the appraisal, that you appraised the wrong property • Providing the right answer to the wrong question. • Providing the wrong answer to the right question. • Recognize some clients don’t really know what they want. But that doesn’t relieve you from your obligation to define the problem and build a scope worthy of the problem.

21. Modeling Your Appraisal Report….. How do you protect yourself? Follow the Appraisal Process!

22. Modeling Your Appraisal Report….. How do you protect yourself? Define the problem • Take as much time as necessary to understand what the client wants. • Delve into the background • Understand the issues • Check for conflicts of interest • Write out your version of the client’s problem and get the client to sign off.

23. Modeling Your Appraisal Report….. How do you protect yourself? Develop a scope for the defined problem • Use the value methods best suited to the problem • Fashion the market analysis for the issue • Highest and Best Use concern • Talk to others involved in the field

24. Modeling Your Appraisal Report….. How do you protect yourself? Intended Use and Intended User • Reports are to be written so the Intended User can understand them – go to the lowest common denominator. • Don’t try to be cute with double talk (Check out AO 20). • Are you talking to a judge or to a jury? Underwriter or auditor?

25. Modeling Your Appraisal Report….. How do you protect yourself? Writing the report • Explain everything – Logical explanations that are wrong carry more weight than no explanation at all. • Create a synopsis of the problem and your answer at the beginning of the report • What to do when you’ve made a mistake? • Drafts?

26. Modeling Your Appraisal Report….. Questions Nick A. Tillema, MAI, SRA, AI-GRS, CCIM Access Valuation, LLC (317) 571-8800 Nick@AccessValuation.com